Gillespie's Guide to Travel+Procurementhttps://gillespie411.wordpress.com
Education, Innovation and Best PracticesTue, 11 Jul 2017 14:52:25 +0000enhourly1http://wordpress.com/https://secure.gravatar.com/blavatar/2f413aaebf7607371d376af572a320d9?s=96&d=https%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngGillespie's Guide to Travel+Procurementhttps://gillespie411.wordpress.com
A Big Win No One Is Talking Abouthttps://gillespie411.wordpress.com/2017/07/10/a-big-win-no-one-is-talking-about/
https://gillespie411.wordpress.com/2017/07/10/a-big-win-no-one-is-talking-about/#commentsMon, 10 Jul 2017 15:30:52 +0000http://gillespie411.wordpress.com/?p=2775Continue reading →]]>Two years ago I wrote that travel managers face two paths.

One path is to keep doing what you do today: jumping through endless supplier meetings, putting out fires around traveler service issues, continually hacking away towards inbox zero… In short, doing all those things that add short-term tactical value.

The other path leads to adding higher, more strategic value by focusing on travel’s broader business impact. I’ll preach about taking this path at GBTA in Boston on July 17th.

One area along this path that I think is rife with opportunity is non-employee travel. Think recruiting trips for on-site interviews, new-hire training, or guest visits such as speakers, partners, or customers.

Most all the current corporate travel tools and systems were built for current employees. If you worry that your own travelers don’t enjoy that experience, how do you think your non-employee travelers feel?

Think about their travel experience with your firm as a welcome mat. It’s probably the first tangible impression, the first practical insight into how your company really treats its people.

I suspect that for many programs, non-employee travel is a high friction experience. But it doesn’t have to be.

If you can ‘wow” these external travelers with a high touch, low friction experience, senior leaders will see the impact you’re making.

Your SVP of Talent Acquisition will appreciate how you’ve enhanced their candidate experience, and helped win top talent. Your Chief Revenue Officer will love that the prospective clients they’ve flown in for coveted face-to-face time are impressed by the way your firm operates.

In short, upgrading the non-employee travel experience:

Plays to your expertise,

Is ignored by most firms, and

Lets you shine before a senior management team, especially budget owners like a Sales SVP.

That’s the strategic opportunity here. So what does it look like, in practice, to nail non-employee travel?

Some key issues to solve:

You want to make a great first impression. Today, that means showing off a high mobile IQ by delivering a mobile-first traveler experience from registration to reimbursement.

You’ll need a clear and seamless way to get travel details communicated back-and-forth between your agency, the guest, and the guest’s “host.” You’ll want to avoid this turning into a bunch of 3-way email threads.

This problem gets even worse when the traveler has a disruption mid-trip and reaches out to the wrong person. Have a look at Freebird to solve this problem.

The experience will be best for the guest if they don’t need to pay for flights, hotels, and ground out-of-pocket. Virtual payments, direct billing, and CC authorizations are all solutions that have various pros and cons to ensure guests are not asked for a credit card at the hotel or rental car counter. BTN wrote last week about how The Advisory Board and their TMC have developed a virtual card program to solve similar problems—definitely work checking out for the “DIY” approach.

There are compliance and legal factors to consider when working with non-employees. For interviews, if the recruiter or hiring manager collects protected-class data like birthday or gender, that’s a risk that needs to be managed.

Duty of Care remains a priority, meaning good reporting and integration into your risk management platform is important.

If you’re intrigued by this way to improve your program, I recommend checking out Pana, a new travel tech startup.

They’ve solved for many of the considerations I’ve outlined above, including mobile-first design, centralized billing, clean traveler communication, and protection of sensitive traveler data. (Full disclosure: their CEO Devon Tivona has become a friend and mentee, however I have no financial interest in the company).

Their team engineered one of—if not the—first mobile tool exclusively for non-employee travel. Pana won the 2016 TUMI x Wired Innovation in Travel Award, beating out consumer-facing applications like Kayak.

No surprise that Pana is getting traction with Silicon Valley firms, but any firm that does a lot of recruiting or other non-employee travel should benefit.

Here’s to putting a really nice welcome mat out for all your travelers!

Imagine giving management a choice between these two travel programs: “Nickels and Dimes” and “Goldmine”.

In the Nickels and Dimes program, they get travelers who are more burned out, more likely to quit, have less productivity, report higher rates of sickness, are less willing to travel, and for the kicker, produce 22% less effective trips.

In the Goldmine program, they get the opposite – happier, healthier, more productive travelers who are more willing to travel and – pay attention – produce more effective trips.

Of course the Goldmine program is going to be more expensive. Just like an iPhone is more expensive than a cheap flip phone…you get what you pay for.

And yet travel managers the world over are quite comfortable promoting the Nickels and Dimes program, and senior managers believe it is the right way to manage their travel budgets.

But new evidence challenges the status quo. It shows the negative costs associated with a Nickels and Dimes program.

ARC, GBT and tClara sponsored this research into this hugely important issue of how travel programs affect road warriors and the impact of their trips.

The results are really clear. Travelers managed under cost-focused travel policies, like the Nickels and Dimes example, produce significantly worse business outcomes. Surely these programs are cheaper on the travel budget, but at what larger cost to the business?

If you are a travel manager or procurement buyer, you owe it to yourself and your company to take a fresh look at what type of business results your travel program could be delivering.

Let me know if you’d like to chat about how to get started. It’s a pretty easy path forward.

Why not take those two pieces of data and show what it costs business folks to fly per hour? Let’s face it, talking about price per mile might be great for aviation pros, but it’s not great for briefing management about travel expenses.

ARC’s Definitive Data, Air Clarity’s Innovative Analysis

Air Clarity, my firm’s air spend benchmarking tool, crunched a few million airline tickets from ARC’s corporate ticket database to get the answers. Since ARC stores all travel agency tickets sold in the U.S. on most every airline (excluding Southwest and a few other low cost airlines), this data is as good as it gets.

Here’s what the price per flight hour looks like, based on the average hourly prices paid by roughly 2,100 corporate travel programs:

The quick answer: About $80 an hour for short haul (domestic) flights; about $110 an hour for long haul flights

Doesn’t that make for a much easier conversation about the cost of air travel?

For context, this study by American Express GBT, ARC and my firm found that the average road warrior earned about $80 an hour, assuming 2,000 work hours per year.

Travel managers, try talking to your business stakeholders about the price per hour of air travel, and see if that doesn’t make for more engaged discussions.

Custom Industry Peer Group Benchmarks

If you’re wondering what your company’s price per hour is, and how that compares to other firms in your industry, good news…tClara is organizing industry peer groups to help provide even better value from our Air Clarity benchmark data. Here are the groups we’re starting:

If you’re a travel manager interested in one of our industry peer groups, follow the group by signing up here…no cost, no obligation.

More information about Air Clarity’s benchmark reports for corporate travel managers, TMCs and airlines is here.

Some limitations and definitions around these price per hour numbers:

These are averages taken from corporate programs, with no adjustment made for the cabins in which tickets were booked. It’s safe to assume that the $262 per hour shown in the 90th percentile of all long haul programs is caused by a relatively high percentage of tickets booked in Business or First Class cabins.

The data does not factor in Southwest ticket prices, which if included would likely affect the short haul prices per hour.

A flight hour is based on the city pair’s average scheduled non-stop flight time per the Innovata airline schedule data. For markets without non-stop flights, we use the city pair’s great circle distance to estimate what the flight time would be, based on times for similar length non-stop markets.

Short haul markets are all intra-U.S. city pairs, and all exit-US city pairs less than 2,700 nautical miles (very roughly about a 6-hour flight time). All other markets are exit-US city pairs over 2,700 NMs.

American Express GBT is phasing in a $10 surcharge for handling airline tickets from carriers who don’t use common industry channels for sales and settlement. (More coverage here, here and here.)

Think of this as the opposite of the €16 surcharge that Lufthansa Group is applying to tickets purchased via the traditional GDS/TMC channel. One happens if you buy in the GDS, the other happens if your LCC airline doesn’t play there.

Both of these surcharges annoy buyers. “What – you’re going to charge me more based on where I buy a ticket, or who I buy it from – that’s outrageous!”

In fact, it makes perfect sense. Lufthansa and GBT make the same point – their costs to process a purchase vary by channel. They both have found a way to allocate these costs to buyers, nay, the travelers, who use the higher-cost channel.

The benefit to buyers of these new surcharges are real, just less obvious. Those buyers who prefer the lower-cost channel will save some money…but those savings come with offsetting costs.

GBT makes a good argument about the extra costs it incurs when handling a non-GDS, non-ARC/BSP airline ticket. While most buyers don’t appreciate how much more work that is, they should admit there is some, and so it’s a fair question of how to allocate those costs.

In turn, this should force buyers to recognize the extra value they get whenever they buy in the higher-cost channel. For Lufthansa customers, this means using the GDS/TMC channel to provide comparison shopping, interline ticketing and immediate data capture, for a cost of 16 euros.

For buyers using low-cost carriers, you can have GBT book, track and handle those LCC tickets for $10.

It’s like having to drive 15 minutes out of your way to get lower prices at a Walmart…the sticker prices are lower, but you have to spend extra time and fuel to get ’em. Maybe you should just order the same thing from Amazon and pay a $10 delivery fee…

As a free-market fan, I’m in favor of offering these choices to buyers, rather than spreading the costs over all customers. It just seems fair.

The big question is whether other TMCs will follow GBT’s lead. In all fairness, I think they should. At the same $10 price? That’s another good question best left to a free market.

Fortunately, these problems are fairly predictable, and can be managed with a bit of planning, effort and honest communication. If you know a road warrior or two, read on, as they may well benefit from the sage advice from Megan Bearce, author, licensed marriage and family therapist, and wife of a road warrior.

I connected with Megan on the issue of traveler friction, something she knows well, especially as it impacts couples and families. She’s written a terrific book on this subject, and offers the following practical advice.

A Guest Post From Megan Bearce:

I am happy to report that whether you are a road warrior or a “super commuter,” (employees who travels 90 miles or more to their job), physical separation doesn’t have to mean emotional distance. Below are three strategies from my book, Super Commuter Couples: Staying Together When A Job Keeps You Apart, to help your relationship thrive despite being apart.

1) Coming home:

People assume that reuniting after days on the road would be exciting, but in reality this “re-entry period” was the most frequent source of tension cited by couples. Often your spouse creates a system for when she or he is alone, so when you return, it can quickly become apparent that each of you has a very different style of parenting, of loading the dishwasher—you name it. So how do you go from “me” to “we”? Do you want 10 minutes of alone time after you walk in the door? Does your spouse want a date night away from the kids? Discussing how each of you prefers to reconnect, and acknowledging that it can be bumpy at first, are both key in making the transition phase go smoothly so that you can enjoy quality time together before one of you heads out on the road again.

2) Ask for help:

Create a support network to make your life easier by hiring a handyman, a babysitter, a lawn service, or a cleaning company. Knowing you can come home from a business trip and not face a long “to-do” list, or a spouse who is exhausted from shouldering domestic responsibilities, can benefit the whole family. Think of it as an investment in the health of your relationship. You can read more about how my husband and I have made a cross-country super commute work for almost years 6 years here.

3) Communication:

I bet you’re shocked to hear me in my therapist role suggest that couples need to communicate! Despite more ways than ever to stay connected, people don’t always do it in meaningful ways. Because life changes when you are away, especially when kids are involved, FaceTime with them and keep in touch with your spouse via apps like Couple or Snapchat. Don’t underestimate the power of a quick text saying, “I love you” or a note left on the coffee maker before you leave. A recent article stated that the most important thing to do in a relationship is ask, “How are you doing today?” Start each phone call or text with that question, and then really listen to your spouse’s answer.

Career success and relationship success do not have to be mutually exclusive. With a little effort and help from technology, you can have both. Is there something you and your spouse do to bridge the distance? I’d love to hear from you in the comments section. For more information about my practice, visit www.meganbearce.com

Megan Bearce

***

Scott here: Thank you, Megan, for sharing such valuable insights! I found your book very insightful and practical.

A big part of dealing with traveler friction is understanding how road warriors feel about all that travel. For a free copy of a 13-page groundbreaking study of traveler friction, text TCLARA to 22828. This study is sponsored by American Express GBT, ARC and tClara.

Quick – name three metrics that travel managers care most about…and no, you can’t say savings, savings and savings.

Savings, for sure, maybe followed by discounts and policy compliance, or average ticket price/room/car rate. These are time-tested, industry-accepted, common-sense metrics that are the foundation for status-quo management of the travel category.

(Going to GBTA’s Convention? See a related meet-up note at the end of this post)

Before you reject my call to demote these traditional metrics, consider the maxim “Measure what matters”. Note that it isn’t “Measure what’s laying around, looking like it matters”. It’s not “Measure what we’ve always measured”.

It’s the “what matters” part that’s the key. That, and an evolved view of travel management’s mission.

Shouldn’t the goal of managing travel be to create the most value from whatever the travel budget is? To create the biggest business impact, net of the cost? Sure…which means we need to think about measuring said impact.

But not in an egg-headed, PhD, ROI kind of way…nobody knows how to do that. Let’s keep it simple, practical, doable.

Which means thinking about the measurable impacts we want from a travel program. And no, we’re not talking about online adoption rates or lowest-logical fare compliance rates…those don’t meet the bigger-picture criteria of having measurable Business Impact.

Let’s start with the travelers. Surely they are the most important part of any travel program. Road warriors are the most important group among all your travelers. They account for most of your program’s transient spend. They are well-paid to build relationships or bring their expertise to where these things are needed. You don’t want to lose them, especially to the competition.

So whatever Business Impact thingies we measure, we need to put road warrior-related metrics in the center. Now we’re getting somewhere.

Assume for the moment we end up wanting to measure business impacts of a travel program on these dimensions (RW stands for road warrior):

RW recruiting and retention, e.g., time to fill open jobs, attrition rate, etc.

RW productivity, measured in sales, billable hours, etc.

RW willingness to travel over the next few months and years

RW’s trip scrap rate – the share of trips rated as not worthwhile (btw, the average is 12%)

and yes, of course, a clear measure of procurement’s value-add.

Notice that each of these dimensions is directionally obvious. You know if you want more, or less, because you can tell if having more helps the business, or hurts it.

Here’s the bright, shiny point – none of our traditional travel KPIs measure any of these business impact dimensions. We’re not measuring what really matters. Surprised? I was.

Test this by asking “How does knowing my program’s average discount (or savings, or compliance rate) tell me anything about how well our program is doing along any of these important dimensions?”

They don’t. They can’t. That’s not what they are meant to measure.

Agreed, there is no harm, and a bit of good to be had from measuring traditional travel metrics…but please don’t believe that those typical metrics are any good for measuring the core business impact of a travel program.

We need new metrics and a new framework. I’ll expand on this in my session “Advanced Airline Sourcing For Strategic Impact”. It’s Tuesday, July 19th at 11:30 am at the GBTA Convention in Denver.

For those of you going to GBTA, you’re welcome to meet for drinks and apps with Kimberly Meyer (Meetings Analytics), me and other like-minded travel industry folks who dig data served with truth and clarity :> We’ll be at the Embassy Suites across from the Convention Center Monday from 6-ish to 7-ish pm.

Hope to see you in Denver. If you’d like a copy of my presentation, just leave a note below.

The second shoe dropped last week, when The Company Dime broke the news (paywall, worth it) about airlines making complex trips (roughly anything not a simple one-way or round-trip) more expensive – sometimes moderately, sometimes drastically more expensive.

Reliable sources estimate these complex trips to be anywhere from 7% to 16% of a corporate account’s transactions, depending on your definition and travel patterns. Call it 10% – that’s a significant chunk of bookings that are now at risk of much higher prices.

The cost-avoiding solution is to book each individual destination within the itinerary as

separate tickets. The airfares are much lower that way. I don’t understand the airlines’ business logic here, but will assume they have a good reason for this new wrinkle.

It means more work for my travel manager friends. More communication to travelers, more tinkering with the online booking tools, more channeling of travelers to travel agents, all to be sure of getting the best prices. Even though it means more tickets to track and more live transactions to pay for.

The lesson from that shoe-drop number two?

Move your complex bookings to a live travel agent, or deal with a messier online booking experience, or keep it simple and book one ticket online for the whole itinerary and a whole lot of pretty pennies. (Note that booking on airline.com doesn’t help – you get the same high prices for a complex, single-ticket itinerary.)

Now about that first shoe. It dropped a few weeks ago when Lufthansa posted its financial results.

That’s when we saw that the highly contentious Distribution Cost Charge (DCC) did no harm to Lufthansa’s bottom line. (The DCC is a surtax of 16 euros on most any booking made through the GDS/TMC channel; prices on Lufthansa.de are therefore 16 euros cheaper.)

That’s a really big shoe-drop, folks. As poorly managed as that change was, Lufthansa got what it wanted – proof that a strong price differential between the two booking channels could be forced into the market, and live to tell the tale.

You have to expect similar actions from other major airlines. Why wouldn’t they go that route, especially with benefit of better planning and stronger data links?

So this second shoe-drop sounds like the first one, lesson-wise. Keep the complex bookings in the TMC/GDS channel, preferably with a live agent until the self-booking tools smarten up. Pay the GDS/TMC channel tax for the extra value you get – a no-brainer.

It’s the simple trips that will soon-ish be in play. If you can save ~ $20 by selecting the airline’s website, and another ~$10 by avoiding the corporate self-booking tool, and you get the traveler’s booking data….you see where this goes.

That’s roughly a 5% savings on a lot of domestic air spend…making it way more than just catnip to many a procurement professional.

If this happens, the GDSs risk becoming dictionary examples of the death spiral. Imagine losing over 80% of ticket transactions that are simple trips, and being stuck with living on the remaining 20% that are complex itineraries.

Prices for GDS booking fees will go through the roof, or there will be new commercial models, or maybe even whole new ways of doing what looks today like GDS processing.

In any case, you, dear travel manager, should be thinking about a two-channel booking strategy.

What types of trips do you want booked where, and why?

If you want an assessment of your account’s exposure to complex trips, write to me at scott@tclara.com

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Innovation and traveler friction are popular topics for you folks, so here are a few quick profiles of new ways to make life easier for travelers.

DUFL – Allows travelers to travel without luggage. A mashup of FedEx and your favorite Downton Abbey butler. DUFL stocks a private closet with your travel clothes, and sends them to your hotel in advance of your arrival. You leave the DUFL suitcase at the hotel upon checkout, and DUFL retrieves it, cleans and repacks your clothes, ready for your next trip. Yes, there is an app for that. More about DUFL here.

Expensify – Automatically, and near- instantly, reimburses travelers for their on-the-road expenses. Snap a photo of the receipt, and the expense reporting tool automatically cues it for payment the next day. It’s hard to imagine making expense reimbursement any easier. More about this feature here. Hat tip to BTN for the coverage.

FlyAnotherDay – Helps travelers and planners avoid trips to major cities around the globe during city-wide events. An easy way to check a destination’s potential for travel congestion. A new service with affordable pricing that solves a pesky problem.

What3Words – not really a travel app, but keep reading…this app makes finding places really easy, especially those places without a street address. Imagine your travelers wanting to meet on a campus for a recruiting trip, or at a ferry point, or an oil rig. This service makes it easy to identify any location on the globe using three words. Interesting implications for travel risk management, yes?

I have no commercial ties to any of these firms; just a fan of their efforts.

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Many thanks for reading, and great good wishes for an interesting 2016!

Filed under: Travel Management, Travel Procurement, Travel Suppliers]]>https://gillespie411.wordpress.com/2016/01/05/top-5-posts-in-2015-what-should-i-write-about-in-2016/feed/1ScottPencil as a question markHotel RFP Hell: Is the End at Hand?https://gillespie411.wordpress.com/2015/10/06/hotel-rfp-hell-is-the-end-at-hand/
https://gillespie411.wordpress.com/2015/10/06/hotel-rfp-hell-is-the-end-at-hand/#commentsTue, 06 Oct 2015 15:36:07 +0000http://gillespie411.wordpress.com/?p=2637Continue reading →]]>Let’s agree that all our friends and colleagues who are in the midst of yet another grueling hotel RFP season should have our sympathies.

You’re dealing with big chunks of invisible hotel spend, crappy data on the visible spend, clunky RFP tools, tedious back-and-forth negotiations, last room availability promises that won’t be kept, and disgruntled hoteliers only too happy to poach your travelers with squatter rates that they’ll offer as long as it suits them. Ugh.

Oh, yes – you’re also facing one of the toughest negotiating environments in what, a decade? Ouch.

Speaking of decades, we know you’ve been putting up with this predictably stressful process year after year, for what, two or three decades? Gag.

Hang in their, friends, for the future is much brighter. I saw a glimpse of it at the Beat Live conference in D.C. last week. But fair warning…you’ll need to grit your teeth and open your minds, as it’s not an easy pill to swallow.

Two pills, really. The first is TRIPBAM; the second is dynamic pricing. Here’s how they get you out of the hotel RFP desert:

TRIPBAM is a clever hotel rate shopping service. Send it a hotel reservation, and the service monitors that hotel’s rate, and if you like, a set of nearby similar hotels (your choice if they need to be preferred hotels). These similar hotels are all in a geographic cluster, so the traveler should not have a location issue.

If TRIPBAM finds a lower rate than the initial rate in the cluster, you get the option to cancel the original and re-book at the lower rate.

Folks, this is like sourcing every hotel in your program 24/7/365…all on auto-pilot. Look, Ma – no hands, no RFP process. Woohoo!

But wait, you say – surely I still need to go through RFP hell to get those initial rates, right?

No, you don’t, or at least not nearly to the same extent as you’ve done in the past. This is where dynamic pricing comes in.

Instead of negotiating for flat room rates, you negotiate for a discount off of BAR – on all room types, no blackout dates. Voila – no more LRA issue.

Sure, taking a discount off of BAR means your prices will fluctuate. Up or down. Just like airfares. What should matter most is whether or not your travelers have access to a room at a price that is below market, and that the supplier will actually honor that price.

Even if you’re not sold on dynamic pricing, you can use TRIPBAM to cut way down on your hotel RFP workload. In your high-volume markets, stick with the traditional negotiation for fixed rates…but for everywhere else, you have a couple of interesting options:

One is to tell your most popular hotels in each lower-volume market cluster what rate you need to get them onto the approved list, and that you’ll be shopping rates anyway in the market. TRIPBAM can tell you what the average shopped rate is in any market cluster, so you’ll have a trusty benchmark for your price-setting.

The other is to not bother seeking a preferred rate from any hotel in your lower-volume markets, and just rely on the rate shopping service to serve up the most cost-effective hotels throughout the year.

Most corporate hotel programs have a really long tail of room nights by market, so you could wind up chopping your RFP workload down by what – two-thirds? You’d have a lot more time to put into those high-volume market negotiations, or for any of the dozen other things that need your attention in the last half of the year.

Still not convinced? Check out this story on BTN about how Dell’s Kristina Laurel is using TRIPBAM to improve her hotel program.

Agreed, this isn’t a perfect vision for ending the hotel RFP madness, but this type of automated rate-shopping service surely is a big part of the solution.

NB: I have no commercial ties to TRIPBAM; just a fan of this clearly useful innovation in our industry.

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